The 25 or 50 debate continues ahead of Wednesday's Federal Reserve meeting. The case for a 50bp cut was reignited by ex-Fed official William Dudley's comments to The Wall Street Journal. The OIS markets are now pricing in 38bps of cuts for the September FOMC, indicating a high degree of uncertainty and making it a very tight call. The dollar continues to weaken, highlighted by GBP/USD opening above 1.3200. My personal thoughts are that it will be a 25bp cut, with the series of 25bp rate cuts extended. The caveat in all this is the election and the deteriorating data.
Overnight, 'The Mega Techs' have been in the news, with Apple shares down 2%—pre-orders for the iPhone 16 and Max are 16% lower compared to the iPhone 15. Meanwhile, Amazon CEO Andy Jassy has insisted that workers return to the office five days a week in the New Year to improve collective creative collaboration and productivity. It now seems government departments are the last bastions of this perk.
In other news, spot gold fell 0.1% to $2,579.30 an ounce, West Texas Intermediate crude rose 0.8% to $70.63 a barrel, Bitcoin rose 1.8% to $58,716.74, and Ether rose 1.3% to $2,304.53. On the data front, we have the Germany ZEW survey at 10 am, and in the US, we have Industrial Production and Retail Sales.
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